Paper Company acquired 100 percent of Scissor Company's outstanding common stock for $370,000 on January 1,...
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Paper Company acquired 100 percent of Scissor Company's outstanding common stock for $370,000 on January 1, 2008, when the book value of Scissor's net assets was equal to $370,000, including Accumulated Depreciation of $24,000. Problem I summarizes the first year of Paper's ownership of Scissor. Paper uses the equity method to account for investments. Scissor's net income in 2009 was S107.000 and declared dividends of $30,000. The following trial balance summarizes the financial position and operations for Paper & Scissor as of December 31, 2009: Scissor Company Paper Company Debit Credit Debit Credit Cash 232,000 116000 Accounts Receivable 165,000 97,000 Inventory 193,000- 115,000 Investment in Scissor Stock 515,000. Land 250,000. 125,000 Buildings & Equipment 875,000- 250,000 Cost of Goods Sold 278,000. 178,000 Depreciation Expense 65,000 . 12,000 Selling & Administrative Expense 312,000 58,000 Dividends Declared 90,000 30,000 Accumulated Depreciation 630,000, 48,000 Accounts Payable 85,000 - 40,000 Bonds Payable 150,000 100,000 Common Stock 625,000. 250,000 Retained Earnings 498,000. 188,000 6 Sales 880,000 355,000 Income from Scissor 107.000 Total 2,975,000 2,975,000 981,000 981.000 Required (End of the 2n year) a. Prepare any normal equity method journal entry(ies) related to the investment in Scissor Company during 2009. Inuest .in SCU Sor comp. 370 K 107 k Inuest in scissor comp. Inome trom scisorome lo7Ic 3ok Cash Invest men inscis sor come. b. Prepare the eliminating/ consolidation entries needed as of December 31, 2009, to complete a consolidation 30K worksheet. comm Stak 250K 188K lo7K Incomefrom Snoopy Dividends deciared Investments iasage 30K c. Update T-accounts for the Investment & Income Accounts & Book Value Calculations: Investment in Income From Scissor Scissor 68 438 K 30k l07k NI EB 515 k 515 k 107K TI0TKY Book Value Calculations: Total Book %3D Common + Retained Value Stock Earnings Beginning book value 438000 25000 107 o00 ( 2o00) ( 3oc00) Ending book value 2500 Paper Company acquired 100 percent of Scissor Company's outstanding common stock for $370,000 on January 1, 2008, when the book value of Scissor's net assets was equal to $370,000, including Accumulated Depreciation of $24,000. Problem I summarizes the first year of Paper's ownership of Scissor. Paper uses the equity method to account for investments. Scissor's net income in 2009 was S107.000 and declared dividends of $30,000. The following trial balance summarizes the financial position and operations for Paper & Scissor as of December 31, 2009: Scissor Company Paper Company Debit Credit Debit Credit Cash 232,000 116000 Accounts Receivable 165,000 97,000 Inventory 193,000- 115,000 Investment in Scissor Stock 515,000. Land 250,000. 125,000 Buildings & Equipment 875,000- 250,000 Cost of Goods Sold 278,000. 178,000 Depreciation Expense 65,000 . 12,000 Selling & Administrative Expense 312,000 58,000 Dividends Declared 90,000 30,000 Accumulated Depreciation 630,000, 48,000 Accounts Payable 85,000 - 40,000 Bonds Payable 150,000 100,000 Common Stock 625,000. 250,000 Retained Earnings 498,000. 188,000 6 Sales 880,000 355,000 Income from Scissor 107.000 Total 2,975,000 2,975,000 981,000 981.000 Required (End of the 2n year) a. Prepare any normal equity method journal entry(ies) related to the investment in Scissor Company during 2009. Inuest .in SCU Sor comp. 370 K 107 k Inuest in scissor comp. Inome trom scisorome lo7Ic 3ok Cash Invest men inscis sor come. b. Prepare the eliminating/ consolidation entries needed as of December 31, 2009, to complete a consolidation 30K worksheet. comm Stak 250K 188K lo7K Incomefrom Snoopy Dividends deciared Investments iasage 30K c. Update T-accounts for the Investment & Income Accounts & Book Value Calculations: Investment in Income From Scissor Scissor 68 438 K 30k l07k NI EB 515 k 515 k 107K TI0TKY Book Value Calculations: Total Book %3D Common + Retained Value Stock Earnings Beginning book value 438000 25000 107 o00 ( 2o00) ( 3oc00) Ending book value 2500
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Related Book For
Advanced Financial Accounting
ISBN: 978-0078025624
10th edition
Authors: Theodore E. Christensen, David M. Cottrell, Richard E. Baker
Posted Date:
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